Cutting Costs Takes Priority in Farm Bill Development

Source: Farmgate blog | Apr 30, 2012

In the recent Senate Agriculture Committee[2] action that resulted in the approval of a new farm bill proposal and referral to the full Senate[3] for a floor vote, there were essentially no recorded comments about the cost of the five-year legislation. That is rather remarkable. Hundreds of billions of dollars are being spent, and no one talks about the entire cost of the legislation.

For all of the opposition to agricultural spending, it would seem like someone would hold up the farm bill and announce the cost. But that is not in the mindset of Congress at the moment. Instead, the proposal is being built on how much is not being spent. With everything in Washington keyed on budget reduction, the farm bill is not going to cost $500 billion over five years, or whatever the total might be. Instead, lawmakers are falling over themselves trying to effect savings, and the legislation that passed the Senate Ag Committee was designed to save $26.4 billion.

In fact the proposal had been modeled after a fall 2011 plan by the leadership of the House[4] and Senate Ag Committees that was designed to save $23 billion over the 10-year federal budget baseline. But the Committee came up with additional savings, and just did not happen to announce the total cost. That is where the Congressional Research Service [5](CRS) comes into play, providing background to lawmakers and others about the cost of the legislation, what all is involved, and reasons for the policy.

CRS Agriculture Specialist Jim Monke says “Budget issues are one of the primary factors affecting the development of a new farm bill, particularly in a Congress that is focused on deficit reduction. Funding for the farm bill will be based on the Congressional Budget Office (CBO) baseline projection of the cost of the these farm bill programs.”

And with the supervision of the House[6] and Senate Budget[7] Committees, “the process sets the mandatory budget for the farm bill,” Monke adds. He says the CBO makes periodic adjustments to the baseline to reflect changing economic conditions and the mandatory elements include provisions for commodity payments and crop insurance.

“This allows major farm bill provisions such as the farm commodity programs or nutrition assistance to be reauthorized periodically without assuming that funding will cease or following zero-based budgeting,” he says.

New Farm Bill Cost

The number that you have not heard is the cost of the legislation, which is $995 billion over the course of the next 10 years, for the mandatory elements of the Farm Bill.

Monke says the budget situation is more difficult and uncertain this year than prior farm bill debates because of the federal budget, and he says, “Several high-profile congressional and administration proposals for deficit reduction are specifically targeting agricultural programs with mandatory funding. Across-the-board reductions to most farm bill programs also could occur in 2013 unless Congress avoids an automatic budget sequestration process.”

The largest part of the farm bill has been growing rapidly. The SNAP or nutrition program was only 67% of the 10-year total in 2008, but it is 78% of the 10-year total in the current year’s appropriation. That is the result of the increased needs for food assistance. At the same time, crop insurance outlays have also risen because of the higher commodity values. And also at the same time the commodity program outlay has fallen because higher market prices have eliminated the need for counter-cyclical funding.

The House Agriculture Committee was supposed to report by April 27 which programs in the agriculture budget it was going to cut to meet the mandated $33.2 billion in reductions. That mandate had come from the House Budget Committee. There has been no word on that occurring; however subcommittees are in the middle of their final hearings before assembling their farm bill proposals.

Independent of those requested cuts, the House Budget Committee has asked for $179 billion in cuts over 10 years in the funding jurisdiction of the House Agriculture Committee.

Summary

Agriculture Committee members on Capitol Hill are working on the 2012 Farm Bill, but their focus is on cutting programs, not on expanding programs. In fact, the proposals all vie for the most that is being cut from the farm bill. There will be a combination of cuts of mandatory programs, such as nutrition, crop insurance and commodity programs, along with cuts being made in annually funded discretionary programs.